New York Markets After Hours

Japan techs drag down market

Oil shares surge in Australia on rising crude prices

By

MarikoAndo

TOKYO (CBS.MW) - Japanese banking shares staged a late recovery Tuesday but their gains weren't enough to offset losses for leading tech issues such as Sony and Fujitsu. Elsewhere in Asia, Seoul followed Tokyo lower, while Hong Kong and Taipei posted gains.

In Japan, the Nikkei Average closed down 0.98 percent, or 130.35 points, at 13,182.00. The gauge at one stage sank as low as 12,984.07, breaking below the key 13,000-mark for the first time since April 11. The broader TOPIX also fell half a percent to 1,307.55.

Investors were paying closer attention to the yen's recent spike than Wall Street's gains. The dollar weakened as low as 118.80 yen earlier in the day before recovered to trade at 119.43 yen in late-afternoon Tokyo, compared with 119.25 yen in New York late Monday. It changed hands at 119.34 yen late Monday in Tokyo. The U.S. currency has dropped about 2 percent against the yen over the past week.

Technology shares were weaker hit by the yen's recent advance, as well as fears over the outlook for their businesses. Tech giant Sony
SNE, -1.38%
fell 1.2 percent to 9,260 yen. Sony's game business unit, Sony Computer Entertainment, said it will lower the price of its blockbuster PlayStation2 game console to 37,800 yen ($315.00) from June 8 in Japan -- a 1,000-yen discount from a current price of 38,800 yen. Fujitsu
FJTSY, +0.26%
lost 0.8 percent to 1,484 yen.

But leading banks, whose weighting totals about 20 percent of the TOPIX index, rebounded from earlier losses. UFJ Holdings, which lost nearly 6.0 percent earlier in the day, closed up 0.3 percent at 640,000 yen and Mizuho Holdings, the world's largest banking group by assets, gained 1.4 percent to 600,000 yen after ending the morning down 4.7 percent.

Yasuo Ueki, a former general manager at Nikko Securities who now owns his own firm, said worries over banks and their bad loans were still hanging over the market.

"Investors have started think that banks won't be able to clean up their bad loans within a few years as ordered by the government because their bad loans are just massive. Players were also cautious ahead of SQ (special quotation) fixing to settle June futures this Friday," said Ueki.

"The Nikkei will most likely trade around the 13,000 level till the end of this week and since trade is very thin, any big sell orders can sharply push down the gauge."

Meanwhile, Yahoo Japan's shares surged 11.9 percent to 4.24 million yen on the over-the-counter market despite Goldman Sachs' downgrading of its ratings. The U.S. investment bank cut its rating on Yahoo Japan, a unit of Yahoo
YHOO
to "market performer" from "market outperformer", citing a downturn in Japan's Internet advertising spending, according to a Reuters report.

Earlier today, Economy Minister Heizo Takenaka said that the Japanese economic recovery had all but grounded to a halt. "My view is unchanged. The economy is in a severe state," Takenaka told a news conference.

In Taiwan, the government's move to bolster stock market trading provided a lift to stocks. Finance Minister Yen Ching-chang said late Monday said the ministry plans to expand company share buybacks, limit share sales by major shareholders and reduce interest on margins, in a bid to boost sluggish stock market trading, according to a Reuters report.

In Australia, resources shares drew active buying on the back of surging oil prices but these gains were more than offset by losses for some technology shares. The All Ordinaries Index closed down 0.14 percent at 3,354.50 points.

But telecommunications software group Open Telecommunications plummeted 15.6 percent to 13.5 cents after the company issued a profit warning on Monday.

Hong Kong's Hang Seng Index closed up 0.35 percent, or 45.90 points, at 13,253.39. Red chip shares, or Chinese companies incorporated in Hong Kong, continued attracting buyers, as they hoped money would flow from the mainland following the full opening up of the B-share market to domestic investors.

Pacific Century CyberWorks
PCW
closed up 0.98 percent at 2.58 Hong Kong dollars. Richard Li's Asian Net and telecommunications vehicle is planning to issue 2 billion dollars worth of bonds to refinance a part of its $4.7 billion loan, the Hong Kong Economic Times reported, citing unidentified banking sources. PCCW plans to complete the bond issue within the third quarter, the paper said.

New Zealand outperformed the region's markets as the Top 40 jumped 2.13 percent to close at 2,065.86 points. Most active Telecom NZ
NZT, +0.30%
which has a 23-percent weighting in the Top 40 index, rallied 4.8 percent to 5.72 New Zealand dollars.

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